THE ESTATE of ISRAEL IGO PERRY DECEASED BETWEEN: (1) Lea Lilly Perry (2) Tamar Perry Plaintiffs v (1) Lopag Trust R (2) Private Equity Services (Curacao) NV (3) Fiduciana Verw Altungsanst Alt (4) Gal Greenspoon (5) Yael Perry (6) Dan Greenspoon (7) Ron Greenspoon (8) Mia Greenspoon (Children, by Hagai Greenspoon, Their Guardian Ad Litum) (9) Admintrust Verwaltungsanst Alt and (1) Andrew Childe (2) Christopher Rowland Third Parties

• Jurisdiction: Cayman Islands
• Judge: Mr Justice Segal
• Judgment Date: 29 June 2023
• Docket Number: CAUSE NO. FSD 205 of 2017
• Court: Grand Court (Cayman Islands)

IN THE MATTER OF THE ESTATE OF ISRAEL IGO PERRY DECEASED

BETWEEN:

(1) Lea Lilly Perry

(2) Tamar Perry

Plaintiffs

and

(1) Lopag Trust Reg.

(2) Private Equity Services (Curacao) NV

(3) Fiduciana Verw Altungsanst Alt

(4) Gal Greenspoon

(5) Yael Perry

(6) Dan Greenspoon (7) Ron Greenspoon (8) Mia Greenspoon (Children, By Hagai Greenspoon, Their Guardian Ad Litum)

(9) Admintrust Verwaltungsanst Alt

and

(1) Andrew Childe

(2) Christopher Rowland

Third Parties

Before:

The Hon. Mr Justice Segal

CAUSE NO. FSD 205 of 2017

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

Appearances:

Ms Tracey Angus KC instructed by Guy Dilliway-Parry of Priestleys appeared on behalf of the Fifth Defendant

Mr Graeme McPherson KC instructed by Campbells LLP appeared on behalf of the Trustees

JUDGMENT

Introduction

1. This is my judgment on the Fifth Defendant's Amended Notice of Motion (the ANOM) in which she seeks (in paragraph 6 of the ANOM) a declaration that the First and Ninth Defendants (the Trustees) breached the terms of a proprietary injunction made by this Court on 17 October 2017 (as subsequently amended) (the Injunction) by entering into a financing (litigation funding) agreement (the LFA) with a litigation funder (the Funder) on 22 June 2018 and/or by entering into any variation thereof (the Trustees entered into a deed of variation of the LFA dated 26 March 2021(the DOV)). The Fifth Defendant also seeks (in paragraph 7 of the ANOM) an order pursuant to GCR O. 52 that the Trustees be fined for contempt of Court.

2. I have previously heard the Fifth Defendant's application for such a declaration made pursuant to her original Notice of Motion (the NOM) dated 23 March 2022. On 23 February 2023, I handed down a judgment (the February Judgment) dismissing the Fifth Defendant's application for such a declaration insofar as it was based on the ground (the Indemnity Ground) that by entering the LFA the Trustees had breached the Injunction because subjecting the assets covered by the Injunction to the Trustees' right of indemnity or lien constituted encumbering or dealing with those assets in a manner prohibited by the Injunction (see [10] of the NOM). The background to the NOM and the ANOM, and the terms of the Injunction and the LFA and the DOV, can be found in the February Judgment (and the other judgments referred to therein).

3. However, in the February Judgment I noted that the Fifth Defendant had also relied, albeit somewhat belatedly, on an alternative ground (the Alternative Ground) relating to the impact of clause 27.3 and schedules 3 and 4 of the LFA on certain loans made by the Trustees as trustees of the Ypresto Trust (the Ypresto Trustees) to themselves in the capacity as trustees of the Citizen Trust (the Citizen Trustees) and on the security granted therefor. Clause 27.3 of the LFA stipulates that the Trustees' obligations under the LFA take priority over their rights as creditors under any loans made by them as trustees of one trust to themselves as trustees of another trust so that, it was said, clause 27.3 had the effect of subordinating and thereby prejudicing the rights of the Ypresto Trustees in respect of the loans made to and the debt owed by the Citizen Trustees in breach of the Injunction. Schedules 3 and 4 of the LFA related to agreements to be entered into by the Trustees with the Funder under which proceeds received by the Trustees from litigation or retained by the Trustees after the conclusion of litigation were first to be applied in paying sums due under the LFA and making payments to the Funder.

4. I held that the dismissal of the paragraph 6 claim based on the Indemnity Ground was without prejudice to the Fifth Defendant's right to proceed with her application for a declaration based on the Alternative Ground, subject to her amending the NOM to plead it. The order made following the delivery of the February Judgment gave the Fifth Defendant permission to amend the NOM to plead her case based on the Alternative Ground. That order also gave directions for the filing of further evidence in support by the Fifth Defendant and evidence in reply by the Trustees and for a further hearing.

5. The ANOM was filed on 1 March 2023. In support of the ANOM, the Fifth Defendant relied on her Third, Eleventh, Fourteenth, Fifteenth, Sixteenth, Seventeenth, Eighteenth, Nineteenth and Twentieth (D5 20) affidavits. In opposition to the ANOM, the Trustees relied on various affidavits sworn by Mr Dominik Naeff (Mr Naeff), a board member of the First Defendant, being his Seventh (Naeff 7), Eighth (Naeff 8), Ninth, Tenth and Twelfth (Naeff 12) affidavits (and his Thirteenth Affidavit filed with my permission after the hearing (Naeff 13)) as well as affidavits sworn by Mr Klaus Boehler (Mr Boehler), a board member of the Ninth Defendant. Mr Naeff is a director of the First Defendant and was authorised to give evidence on behalf of the First Defendant, the Ninth Defendant and Cato Trust Reg (the other trustee of the Lake Cauma Trust). Naeff 7 and Naeff 12, and D5 20 had been filed without permission and not in accordance with the directions I had given but ultimately no objection was made to permission being given provided that all three affidavits were admitted into evidence.

6. The further hearing took place on 23 May 2023. Once again, Ms Angus KC appeared for the Fifth Defendant and Mr McPherson KC appeared for the Trustees.

Summary of conclusions

7. In relation to the Fifth Defendant's claim that the Trustees acted in breach of the Injunction by agreeing to the contractual subordination contained in clause 27.3 of the LFA, I have concluded (after carefully considering the parties' submissions which I have summarised below) that:

• (a). that by entering into clause 27.3 of the LFA the Ypresto Trustees agreed that the debts payable to them in respect of the Loans owed by the Citizen Trustees and the Lake Cauma Trustees would only be payable after sums due to the Funder by all of them had been paid in full and amended their rights as creditors of the Citizen Trustees (secured creditors) and of the Lake Cauma Trustees.

• (b). that this amendment of rights was intended to and did take effect immediately.

• (c). that the Ypresto Trustees' rights under and in respect of the Loans were subject to the Injunction.

• (d). that an amendment to those rights which qualified and limited the Ypresto Trustees' right to repayment of the Loans constituted a dealing with the Loans which was prohibited by the Injunction.

• (e). that the terms of the Injunction prohibiting dealings with assets subject to the Injunction were clear and unambiguous and that the breach of the Injunction by amending rights under Loans subject to the Injunction was clear and obvious (where the Trustees' legal advisers could reasonably be expected to have confirmed and noticed such an amendment of substantive rights in respect of property subject to the Injunction would be or was very likely to be treated as a dealing requiring an application to Court).

• (f). that the common law rule that prohibits the enforcement of contracts whose performance involves conduct that is illegal or contrary to public policy does not prevent the Trustees' conduct from constituting a breach of the Injunction.

• (g). it would not be appropriate at this stage to decline to declare that the Trustees had breached the Injunction on the ground that any adverse financial impact on the Plaintiffs or the Ypresto Trustees of (or risk of financial prejudice to them resulting from) the contractual subordination and amendment of rights was likely to be de minimis or capable of being avoided by the Trustees. This is inappropriate where the Trustees have not filed an application to strike-out the ANOM on the ground that the alleged breach was insignificant and insubstantial and therefore should not form the basis of a claim of contempt; and where directions have been given for a two-stage process for hearing the ANOM in which there is to be a second hearing in the event of a finding of a clear breach of the Injunction to consider the consequences of the breach and what if any fine should be imposed as a result of the breach and where at least some relevant facts have yet to be established and remain or are likely to remain in dispute.

• (h). it would also be inappropriate at this stage to decline to declare that the Trustees had breached the Injunction on the ground that the Fifth Defendant is pursuing the ANOM for an improper or collateral purpose where (i) the Fifth Defendant has confirmed that at least one of the purposes of the ANOM is to draw to the Court's attention to what she considers to be serious and material breaches of the Injunction and (ii) the Trustees have not filed a strike-out application on the ground of abuse of process. But I do have a concern that the ANOM is being used to open another front in the global battle between the Trustees and the Fifth Defendant (and the Plaintiffs with whom the Fifth Defendant now appears to be reconciled or at least cooperating) at a time when the main proceedings have been concluded. I can see that the Fifth Defendant can legitimately say that it is proper for her to police the Injunction and bring what she genuinely believes to be serious breaches of this Court's orders to the Court's attention and to the attention of the Liechtenstein court. But she must be careful not to use the ANOM simply to put pressure on the Trustees and to weaponise the application to enforce this Court's orders so as to achieve a tactical advantage in the wider hostilities.

• (i). it does appear to be likely that the Trustees will be able to show that there was no substantial risk of prejudice to the Plaintiffs or the Ypresto Trustees flowing from the amendment to the Ypresto Trustees' rights in respect of the Loans because it remained the case that the Loans remained capable of being and would be...